Deutsche Bank has agreed to sell a $2 billion portfolio of commercial property loans to TPG, a US private equity firm, it is reported.
The deal is being driven by the upswing in the commercial real estate market, and Deutsche Bank is expected to post a profit on the deal.
The transaction must be approved by regulators but could be signed sometime this month. Deutsche Bank is Germany’s largest lender and will retain a minority stake in the portfolio after conclusion of the sale.
The assets to be sold include mortgages on office buildings and shopping malls – loans originated with Deutsche Bank – as well as outstanding debt that the bank bought on the market.
Deutsche Bank is making an effort to reduce its balance sheets to alleviate the effects of strict banking rules. The lender has set a goal to rid itself of €250 billion ($313 billion) in assets by the end of 2015, weighted by their risk.
At the end of September, it had already been able to sell off close to €200 billion in assets, or approximately 80 per cent of its target.
The commercial property market in the United States has enjoyed the benefit of a recent upswing. Banks issued $28 billion in commercial mortgage-backed securities in Q3, which is the highest quarterly level since 2007 housing crisis, according to figures supplied by Commercial Mortgage Alert.
Deutsche Bank has said that it plans to continue to invest in strengthening its US commercial real estate financing business.
